Show Me The Money: Lawyers May Withdraw If Not Paid Fees

The American Bar Association released Formal Opinion 476, which addresses whether a lawyer can withdraw from a civil case because a client failed to pay the lawyer’s fees, without jeopardizing the duty of confidentiality and balancing this with information that the Court would need to consider granting a lawyer’s motion to withdraw. Withdrawal from a case in any instance invokes ABA Model Rule 1.6—Confidentiality of Information—however, lawyers may choose to withdraw from a case under Rule 1.16(b): Declining or Terminating Representation.

Failure to pay a lawyer’s fees is one reason a lawyer may withdraw from a civil litigation matter under 1.16(b)(5). A lawyer cannot go too in-depth and disclose confidential client information in motions for withdrawal, but previous opinions and Comment 16 to Rule 1.6 permit a lawyer to advise the court that “professional considerations” require withdrawing from the case.

Trial court judges also have to be aware of this balancing act between confidentiality and withdrawal because of unpaid fees. Judges have wide discretion in ruling on such motions. Along with considering the lawyer’s reasons, judges must consider the Court’s calendar and how the withdrawal will impact the parties to the case. Withdrawal motions are less problematic in earlier stages of litigation when these factors (along with the reasons the lawyer provides) are considered; when the case is further along and the trial is approaching, it falls more to the judge’s discretion.

In order to avoid breaching confidentiality when withdrawing over unpaid fees, a lawyer could vaguely reference “professional considerations” with no client information and persuade the court that more is not necessary. Or, if needed the lawyer may submit information deemed reasonably necessary by the court to minimize disclosure if it is appropriate. Lawyers and judges must cooperate in order to protect client confidentiality in motions for withdrawal.

Public Defenders and Part-time Judges: Duties under the Misconduct Rule

Recently, the New York State Bar Association (N.Y.S.B.A.) Committee on Professional Ethics held that a public defender may not represent a client in the court where another public defender is a part-time judge because to do so would violate the public defender’s duties under Rule 8.4(f)—Misconduct.

Rule 8.4(f) prohibits a lawyer from causing a judge to violate his or her own ethical obligations under the Rules of Judicial Conduct not to “permit his or her partners or associates to practice law in the court in which he or she is a judge.”

In the inquiry before the N.Y.S.B.A., the attorney was a member of a public defender office and lived in an area where City Court judges serve on a part-time basis. These part-time judges are also permitted to practice law. Another member of the public defender office was a part-time judge in the City Court.

In reaching its opinion, the Committee reasoned that if the associated part-time City Court judge does not take steps to prevent other lawyers who are part of the same public defender’s office from practicing before the City Court, then the other public defenders—on their own initiative—must decline to make appearances or withdraw altogether.

To read the entire opinion, click here.

Illinois: Don’t Be Quick To Dispose Client Closed Files

According to a recent opinion from the Illinois Bar Association’s Ethics Committee, an attorney can usually dispose of closed client files after seven years without trying to locate the clients and give them advance notice. However, there may be specific situations where it is necessary or prudent to retain a file, or portions of a file, for longer than seven years.  

In the opinion, a law firm was incurring substantial storage costs for closed client files. The firm’s standard engagement letter provided that the firm would return client papers and property upon request, but that the firm reserved the right to destroy or dispose of materials within a reasonable time after the end of the engagement. However, locating and contacting former clients to seek consent for destruction, or to provide advance notice of destruction, would be impossible and costly in some situations.

By drawing on guidance from other jurisdictions, the Committee concluded that firms can generally dispose of closed client files after seven years without prior notice. The committee reasoned that the 10-year retention period proposed by the law firm was “clearly reasonable,” and “a general ‘default’ retention period of seven years for the ordinarily closed file materials of an Illinois law firm also appears reasonable.” Moreover, retaining closed client files for seven years is “consistent” with two Illinois Supreme Court’s lawyer record-keeping requirements and advantageous in the event of a lawyer liability claim. Lastly, the committee stated that it is unnecessary to send a former client notice of the proposed disposal of routine closed materials since attempting to locate former clients will often time be futile, time-consuming, and expensive.

Read the opinion here.

A Co-Counsel Must Receive Notice When Shared Fee Is Received

The American Bar Association’s Standing Committee on Ethics and Professionalism issued Formal Opinion 475, which discusses the issue of safeguarding attorneys’ fees that are subject to splitting with co-counsel. According to Model Rule 1.5(e), a lawyer may divide a reasonable fee with another lawyer as long as the lawyers are not in the same firm, the client provided consent to the arrangement, and the fees ar proportionate to each lawyer’s performed services or each of the lawyers assumed joint responsibility in writing.

As per Model Rule 1.15(a), a lawyer needs to separate held property of third persons from the lawyer’s own property. The Committee determined that when one lawyer receives fees on behalf of multiple lawyers providing services in a matter, the additional lawyers count as third persons under the Rule. Therefore, the lawyer needs to keep the funds divided in a separate account—typically a trust account—within the state that the lawyer’s office is located. Additionally, the lawyer needs to keep complete records of the separate account and preserve it for five years after the representation is terminated.

Finally, the lawyer must promptly notify the other lawyers involved in receiving the funds and promptly deliver the funds that the other lawyers are entitled to receive. If there is any dispute about fee division, Model Rule 1.15(e) requires that the lawyer receiving the funds must keep them separate from the lawyer’s property until the resolution of the dispute.

Click here to read the opinion in its entirety.

Required to Report a Client’s Drug Addiction? Illinois Says Not Necessarily…

A recent Illinois ethics opinion, advised that although a lawyer is obligated to reveal confidential information about a client if is deemed reasonably necessary to prevent certain death or substantial bodily harm, a client’s addiction to heroin or opioid drugs will not trigger that obligation, absent more specific factual details that indicate the risk is not simply remote and uncertain.

This opinion responded to an attorney’s inquiry about a client, who appeared severely impaired during court hearings and had been unable to stop consuming heroin in violation of bond conditions. Illinois Rule 1.6 departs from ABA Model Rule 1.6 and requires mandatory reporting of life-threatening, dangerous information (rather than discretionary reporting).

The opinion acknowledged that this kind of drug addiction is serious and poses a danger to the client’s safety and wellbeing, but could not conclude that the mere knowledge of such an addiction triggers the mandatory obligation. Though the risk need not be immediate, Comment [6] to Illinois Rule 1.6 states that there must at least be a present and substantial threat that the person will suffer such harm at a later date if the lawyer takes no action to eliminate the threat.

Here, the opinion states that even though this client’s drug addiction presents a future risk, “such danger is sufficiently remote in time and uncertain of occurrence as to render us unable to say that it presents the present and foreseeable threat … as would be required to call the Rule into play.” Therefore, under the circumstances, disclosure was not required.

The opinion made clear that this analysis is “intensely fact-sensitive” and that there could be a factual scenario where a drug addiction requires mandatory reporting—such as a client with a history of attempted suicide or self-inflicted bodily harm. Furthermore, the opinion offered an alternative to Rule 1.6, suggesting that Rule 1.14, which discusses clients with diminished capacity, allows for an attorney to take protective actions such as consulting with necessary entities or appointing a guardian, if necessary, without violating confidentiality. These are all avenues that an attorney should consider if confronted with a similar situation.